(Reuters) - Canada’s Bombardier Inc topped analysts’ forecasts for quarterly earnings on Thursday, helped by its business jet unit, which benefited from demand for aftermarket services and higher-priced, large-cabin corporate planes, sending shares up 9.8 percent in early trading.
The results come as the Montreal-based plane and train manufacturer nears the end of a five-year turnaround which followed a series of heavy investments aimed at launching two planes that drove the company to the brink of bankruptcy in 2015.
The company is counting on its recently-launched Global 7500 business jet, which is sold-out through 2021, to help lift annual revenue by 10 percent this year and to over $20 billion by 2020.
Still, quarterly revenue from Bombardier’s dominant transportation unit that makes rail cars and equipment, fell nearly 11 percent to $2.16 billion as it faced delays in fulfilling a handful of contracts.
Bombardier replaced the head of its Berlin-based transportation unit earlier this month.
Chief executive Alain Bellemare said the company was making “significant improvements” toward resolving the contracts, which he said would mostly be completed this year. He told analysts that there was no “systemic issue” in the division.
“BT is a very strong franchise and our ability to win is solid,” Bellemare said.
Bombardier reaffirmed its 2019 and 2020 guidance, reassuring investors fearful about the rail unit’s performance.
“We had some concern there could be delays in 2019 cash recoveries from the unit,” said AltaCorp analyst Chris Murray.
Bombardier also said that a Quebec pension fund’s minority stake in its transportation unit would increase by 2.5 percent to 30 percent.
Chief Financial Officer John Di Bert stressed that there was no “urgency” to buy back the stake acquired by the fund for $1.5 billion in 2015, although Bombardier now has the option to do so.
Revenue from sales of business jets rose more than 3 percent to $1.5 billion in the final quarter of 2018, Bombardier said.
The company’s quarterly net profit overall reached $55 million, compared with a $188 million net loss a year earlier when it made heavy investments in its jet programs.
Earnings before interest and taxation (EBIT), a closely watched measure of Bombardier’s profitability, also beat analysts’ estimates, rising to $342 million from $73 million a year earlier.
Excluding one-time items, the company earned 5 cents per share, above analysts’ estimates of 2 cents, according to IBES data from Refinitiv.
Bombardier shares rose 9.8 percent to C$2.24 at the market open in Toronto.
Reporting by John Benny in Bengaluru and Allison Lampert in Montreal; Editing by Sai Sachin Ravikumar and Nick Zieminski
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